Last December, President Obama signed into law the 2012 Defense Authorization Act, which included reauthorization of the Small Business Innovation Research funding program. The 30-year-old program had become a political football despite being an effective tool for overcoming the failure of the private sector to adequately fund early-stage technology commercialization.

The law directed the Small Business Administration to set eligibility requirements for SBIR grant recipients. Rather than limiting eligibility to majority American-owned small businesses as it had done in the past, the SBA in its proposed rules expanded eligibility to include “domestic business concerns,” which it defines as businesses that make a “significant contribution to the U.S. economy through payment of taxes or use of American products, materials, or labor.” Unlike the SBA’s earlier definition, “domestic business concerns” could include majority foreign-owned concerns that operate primarily in the U.S.

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